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# ECON 132 Midterm: Practice Questions+Solutions for Midterm #1Exam

Department
Economics
Course Code
ECON 132
Professor
Richard Carson
Study Guide
Midterm

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Econ 132 - Problem Set 1 Solution - Winter 2019
1 Conversions
a. How many British Thermal Units (BTUs) are equivalent to 5 kilowatt hours (5 kWh)
of electricity?
5kWh Ã—3412Btu
kWh =17,060 Btu
b. How many million British Thermal Units (MMBTUs) are in 2 short tons of coal?
2short ton Ã—25 MMBtu
short ton =50 MMBtu
c. Six blue barrels of oil (6bbl) contain how many million British Thermal Units (MMBTUs)?
6bbl Ã—5.8MMBtu
bbl =34.8 MMBtu
d. How many blue barrels (bbl) of oil are equivalent to 2 million cubic feet (2MMcf)
of natural gas?
2MMcf Ã—1000Mcf
1MMcf Ã—0.178bbl
Mcf =356 bbl
e. Four short-tons of coal are equivalent are equivalent to how many Mcf of natural gas?
4short ton Ã—25 MMBtu
1short ton Ã—1Mcf
1.035MMBTU =96.6 Mcf
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2 Thermal Eï¬ƒciency
a. The Indian River power plant in Florida uses 8,000 BTU of energy to generate each kilo-
watt hour of electricity. Find its thermal eï¬ƒciency
3,412 Btu/kWh
8,000 Btu/kWh = 0.4265 â‡’42.65%
3 Elasticities
a. (arc elasticity) Compute the arc elasticity of a consumer who uses 40 gallons of gas per
week when the price is \$3.50 per gallon and 50 gallons per week when the price is
\$3 per gallon.
Ç«arc =Q2âˆ’Q1
0.5(Q1+Q2)î€ŽP2âˆ’P1
0.5(P1+P2)
=50 âˆ’40
0.5(50 + 40) î€Ž3âˆ’3.50
0.5(3 + 3.50)
=âˆ’1.44
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b. (point elasticity) Find the point elasticity of demand for a consumer whose demand for
gasoline is given by the function Q= 80 âˆ’4Pâˆ’0.2P2when the price is \$4 per gallon.
Ç«point =
dQ
Q
dp
p
=dQ
dp Ã—p
Q
p= \$4
Q(p) = 80 âˆ’4pâˆ’0.2p2
Q(4) = 80 âˆ’4âˆ—4âˆ’0.2âˆ—16
= 60.8
dQ
dp =âˆ’4âˆ’0.4âˆ—p
=âˆ’5.6
Ç«point =âˆ’5.6âˆ—4
60.8
=âˆ’0.368
c. I consume 50 gallons of gas and 15 gallons of diesel per month and I make \$2000 per month.
The price of gas is \$4 per gallon and the price of diesel is \$5 per gallon, If the price of diesel
falls to \$4 per gallon and I consume 40 gallons of gas, what is my cross price elasticity of
demand for gasoline with respect to the price of diesel?
Ç«QGPD=QG2âˆ’QG1
0.5(QG2+QG1)î€ŽPD2âˆ’PD1
0.5(PD2+PD1)
=40 âˆ’50
0.5âˆ—(40 + 50)î€Ž4âˆ’5
0.5(4 + 5)
= 1
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